Now that the UK has made formal their intention to withdraw from the EU, a two-year window of negotiations has begun during which both parties will furiously attempt to thrash out the details of the separation. As was widely expected, there was minimal reaction in the markets to Wednesday’s news with the pound oscillating around the 1.24 handle against the US dollar whilst the FTSE recovered from some early weakness to end the day little changed.
Two stages to the negotiations?
One of the first matters to be discussed at the negotiating table will be the sequence in which the negotiations themselves will play out. The UK has made clear its preference for simultaneous discussions relating to the two main topics at hand, namely the terms of the divorce settlement and the future trading relationship between both parties. However there’s a growing feeling that the EU is unwilling to discuss future trade deals until the details of the separation are clear and they may look to leverage their position here to gain a more favourable deal. Prime Minister Theresa May is expected to publish a white paper on the Great Repeal Bill today which should outline the manner in which UK law will assume all the EU rules and regulations that applied at the time of Brexit. This is seen as a positive for business as it will create certainty for business over the short-term because the existing rules will not suddenly change.
Accounting woes continue for BT
One of the worst performing stocks on the FTSE 100 this morning is BT, with shares in the telecommunications firm lower by around 1.5%. The firm is trying to find a new auditor after deciding to ditch PWC in the wake of a £530m accounting scandal in the Italian arm of its business. Morrisons Supermarkets is enjoying a decent rise in its stock this morning of almost 2% after an upgrade from US broker Bank of America (NYSE:BAC) Merrill Lynch. Advertising giant WPP (LON:WPP) has also benefitted from an upward revision to its rating from the same broker and is up by almost 1% on the day. Overall the leading UK stock index is little changed this morning and lower by 2 points at the time of writing as it seeks to recoup some of last weeks losses.